Goldman Sachs ‘Confident’ in Memphis

By Amos Maki

In April, Rachel Diller, managing director of the urban investment group at Goldman Sachs, received a phone call in her New York office from officials at Phoenix-based Dudley Ventures.

Goldman Sachs invested $35 million into the Crosstown Concourse project. Now, the investment bank is exploring more investment opportunities in Memphis.

(Daily News/Andrew J. Breig)

The executives at Dudley Ventures, which specializes in large tax-credit supported projects, were arranging financing for the $200 million effort to transform the old Sears Crosstown property and wanted to know if the New York-based investment bank was interested.

“I’ll be forever grateful they made that call,” Diller said.

Goldman Sachs became a Historic Tax Credit investor in what is now Crosstown Concourse to the tune of $35 million, but Diller hopes the company’s investment in Memphis does not end there.

“This is our first investment in Memphis but I’m confident it won’t be our last,” she said.

Launched in 2001, the urban investment group specializes in providing capital to urban communities across the country, committing $3.5 billion to preserve and create housing, community facilities and commercial and retail space.

McLean Wilson, co-leader of the Crosstown Concourse team, took Goldman Sachs executives on a tour of Memphis several weeks ago. The tour included meetings with veteran Downtown developers Henry Turley and Billy Orgel and Robert Montague, executive director of the Binghampton Development Corp.

Turley, along with Archie Willis III, is currently negotiating with Memphis Area Transit Authority to further develop Central Station while Orgel is pursuing the redevelopment of the historic Tennessee Brewery. Montague’s nonprofit is in the process of developing a grocery-anchored commercial center in Binghampton.

“We wanted just to expose them to a broad swath of Memphis,” Wilson said. “I think the hope is we can get them to look at Memphis almost like a portfolio where a handful of deals adds up to what might be their normal investment, and I think they’re excited by that possibility.”

“Their desire to do more in Memphis is authentic,” said Wilson. “It’s not empty words. They wouldn’t take a full day to come down to Memphis and learn more about our city if they weren’t serious about it.”

Teaming with developers, nonprofits and other local stakeholders, the bank’s urban investment group provides much-needed capital to drive projects – and the economic and social benefits they deliver – in urban areas.

“This is our first investment in Memphis but I’m confident it won’t be our last.”

–Rachel DillerManaging director, Goldman Sachs

The goal is to help develop sustainable, self-sufficient neighborhoods that offer jobs, housing, retail and social services.

Over the last 14 years the urban investment group has financed everything from the rehabilitation of a historic theater in Brooklyn to a large bike-sharing program in New York City and an affordable residential building in Salt Lake City, Utah.

To better understand how the Crosstown Concourse project could bring greater investment from Goldman Sachs to other underserved areas of Memphis, it is important to explore the bank’s experience in New Orleans.

In fall 2008, as the housing market crashed and markets seized up, an effort to redevelop the C.J. Peete public housing complex in New Orleans – one of four New Orleans public housing developments devastated by Hurricane Katrina – was perilously close to collapsing.

Developer McCormack Baron Salazar, which also transformed some of Memphis’ public housing stock, was having trouble finding investors willing to finance the project.

However, Goldman Sachs saw the project as an opportunity to create a mixed-income neighborhood that could attract additional investment to New Orleans and provided $61 million in debt and equity capital for the development.

Renamed Harmony Oaks, the development contains 460 apartments and townhomes in 116 residential buildings. Public green spaces, a community center and playgrounds help create a sense of place and foster personal connections at Harmony Oaks. Nearby properties are being developed by retailers, producing a neighborhood where residents can find almost anything they might need, a vast improvement over the isolated public housing projects.

Not satisfied with just Harmony Oaks, Diller said Goldman Sachs has pumped nearly $300 million into 10 projects across New Orleans.

“It always starts with one catalytic project,” said Diller. “We’re always looking for new opportunities.”